Voip Pal Com Inc (VPLM)

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Double, double, toil and trouble;

Fire burn and caldron bubble.

Fillet of a fenny snake,

In the caldron boil and bake;

Eye of newt and toe of frog,

Wool of bat and tongue of dog,

Adder's fork and blind-worm's sting,

Lizard's leg and howlet's wing,

For a charm of powerful trouble,

Like a hell-broth boil and bubble.

William Shakespeare, MacBeth


A Plea for Clarity and a New Approach on Section 101 in 2020

By Emil Malak
January 4, 2020
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“The analysis of courts under Section 101 lacks a key safeguard built into other areas of patent law, namely, consideration of the viewpoint of the person of ordinary skill in the art.”

Section 101 chaos - https://depositphotos.com/18534607/stock-photo-emerging-leadership.htmlThe lack of clarity by the U.S. Supreme Court in its landmark patent case of Alice Corp. v. CLS Bank International, 573 U.S. 208; 134 S. Ct. 2347 (2014) and the subsequent failure of the Federal Circuit to achieve consistency and predictability in Section 101 jurisprudence, has resulted in the destruction of thousands of patents, especially in the fields of information technology, software and life sciences. Was it really the Supreme Court’s intention in Alice to invalidate so many good patents based on so-called judicial exceptions to Section101 such as the “abstract idea” test, which no court has been able to adequately define?

How can the U.S. patent system be trusted when criteria for patent eligibility can no longer be clearly defined and courts can invalidate patents based on judicial discretion, without affording the patent owner due process such as presenting scientific and technical evidence from the viewpoint of a person of skill in the art? Due to the Section 101 problems created by the courts, owning a U.S. patent in the today is no longer an asset but a liability. Inventors are increasingly looking to other countries like China to provide protections they can no longer find in the United States—or are avoiding the patent system altogether. Where will the United States be in 10 years if innovation continues to be stifled and innovators increasingly resort to trade secrets?

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Factual Analysis under Section 101 Ignores the Person Skilled in the Art
With all due respect to the judges who handle patent cases, many lack the necessary technical training and/or experience to judge complex patents. The problem is magnified by the fact that judges often attempt to evaluate a patent at a preliminary stage of litigation—before scientific, technical or expert evidence has been presented to the court. Unfortunately, when unqualified judges (not skilled in the art) are put in a position to hear such cases, they sometimes make decisions without accurate factual foundations and may inadvertently redefine inventions based on their own misunderstandings.

For example, the Federal Circuit recently struck down a patent owned by American Axle & Manufacturing based on Alice. American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, No. 18-1763 (Fed. Cir. 2019). The patent was directed to a mechanical device: a propshaft for vehicles that used a vibration-reducing liner. The majority judges said the claims lacked an eligible “inventive concept” despite evidence the patent owner was first to use tuned liners to attenuate bending mode vibrations in propshafts. The majority judges rejected the patent owner’s assertions. Based on their own independent technical findings of fact: they alleged an unrelated prior art patent disclosed the same inventive concept as the patent owner’s patent—even though neither party made this argument and even though the court did not have the benefit of expert evidence as to how a skilled person would have understood the technology disclosed in the unrelated patent. Id. at 8. The majority judges also criticized the claims for not stating how a liner would be tuned to reduce vibrations. In a scathing dissent, Judge Moore explained that the issue of whether a patent teaches how to use an invention belongs to Section 112, not to Section 101, and needs to take into account what a person of skill in the art would understand from the specification. Id. at 10-14. The majority judges’ repeated failure to consider the viewpoint of a skilled person illustrates the concern of law professors Timothy R. Holbrook and Mark D. Janis, who have pointed out that “the hypothetical person having ordinary skill in the art, has been accorded no place in the Supreme Court’s modern eligibility cases.” Janis, Mark D. and Holbrook, Timothy R., “Patent-Eligible Processes: An Audience Perspective” (2015); articles by Maurer Faculty (Paper 2109); published in Vand. J. Ent. & Tech. L. 17, 349 (2015); see page 363. Indeed, eligibility analysis under Section 101 “entitles a court to kick the hypothetical person of ordinary skill in the art to the curb in favor of a discretionary analysis that need not be constrained by… two hundred years of American jurisprudence on patentability…” ] Id. at page 382.

Put differently, the analysis of courts under Section 101 lacks a key safeguard built into other areas of patent law, namely, consideration of the viewpoint of the person of ordinary skill in the art. It is well-settled that the claims should be construed through the eyes of a person of skill in the art in light of the specification. Obviousness analysis under Section 103 asks whether the invention would have been obvious to a person of ordinary skill in the art. Analysis under Section 112 asks whether a patent’s written description would convey to the skilled person that the inventor had possession of the invention at the time of filing, whether the claims would enable that skilled person to make and use the invention without undue experimentation, and whether the claims inform the skilled person about the scope of the invention with reasonable certainty. However, Section 101 analysis omits the perspective of the skilled person and substitutes the perspective of judges unskilled in the field of the invention, who often feel empowered by Alice to decide scientific and technical questions without expert evidence of record (e.g., under Rule 12(b)(6)).

Patents are awarded based on a patent examiner’s interpretation of how a person skilled in the art would understand the patent and the invention it describes. It is not up to the judge (who lacks skill in the art) to decide eligibility based on whether the judge knows how to make or use the invention. The measure is whether a person skilled in the art knows how to do it. However, in current Section101 cases, we are seeing judges arbitrarily deciding technical facts and rewriting patent law based on their subjective opinions and, in the process, becoming “inventor judges.”

Even Judges Admit the Law Under Section 101 is Confusing, Unpredictable or Incoherent
If the Courts are playing fast and loose with scientific and technical facts under Section 101, the state of the law is likewise depressingly unsettled. Although SCOTUS cautioned in Alice that Section 101 should not be allowed to “swallow all of patent law,” this is precisely what is happening. The scope of the judicial exceptions under Section 101 keeps expanding to the point where Section 101 has become a judicial “shortcut” to doing analysis under the well-settled patent law of other statutory sections such as Sections 102, 103 and 112. In the above-mentioned American Axle & Manufacturing case, Judge Moore pointed out in her dissent that the majority judges had applied the “enablement test” of Section 112 under Section 101, but without following a proper Section 112 analysis. With respect to the law of Section 101, Judge Moore warned, “[t]he hydra has grown another head.” American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, No. 18-1763 (Fed. Cir. 2019) at 13.

Numerous legal commentators and judges have stated that case law under Section 101 is a confusing mess. For example, in Interval Licensing, LLC v. AOL, Inc., No. 16-2502 (Fed. Cir. 2018), Judge Plager’s dissent frankly summarizes the courts’ Alice jurisprudence as “useless”, “an abstract (and indefinable) doctrine,” “unworkable,” an “intellectual morass,” and “incoherent,” among other things. Interval Licensing, LLC v. AOL, Inc., No. 16-2502 (Fed. Cir. 2018). In his critique, Judge Plager cited other leading judges who had spoken out about the Section 101 mess, including Judge Lourie, who had elsewhere stated “the law needs clarification by higher authority, perhaps by Congress, to work its way out of what so many in the innovation field consider are § 101 problems.” Id. at 11.

More recently, retired Judge Michel, who sat for 22 years on the Federal Circuit, made a stunning statement in testimony to Congress about the urgent need for Section 101 reform:

In my view, recent cases are unclear, inconsistent with one another and confusing. I myself cannot reconcile the cases. That applies equally to Supreme Court and Federal Circuit cases. Nor can I predict outcomes in individual cases with any confidence since the law keeps changing year after year. If I, as a judge with 22 years of experience deciding patent cases on the Federal Circuit’s bench, cannot predict outcomes based on case law, how can we expect patent examiners, trial judges, inventors and investors to do so? Testimony of Hon. Paul R. Michel, The State of Patent Eligibility in America, Part I: Hearing Before the Subcommittee on Intellectual Property of the S. Comm. on the Judiciary, 116th Cong. 2 (June 4, 2019)

Indeed, when very experienced judges can’t figure out Section 101 jurisprudence, what hope do ordinary people have, including those who wish to invest in technological innovations?

Is Congress or the Supreme Court Willing to Fix the 101 Mess?
As Alice destroys hundreds of good patents and spreads its chilling effects to the future of the patent system, is Congress or the SCOTUS willing to resolve the uncertain scope of Section 101, the ad hoc discretionary analysis of courts under Section 101, and the contradictory lines of cases as to the proper interpretation of Alice Section101 jurisprudence? We support the efforts of USPTO Director Andrei Iancu to reform a currently dysfunctional patent system but the USPTO cannot singlehandedly fix the Section 101 morass without intervention from a higher authority.

In the absence of any solution from the Supreme Court or Federal Circuit, or a clear and consistent process for applying Section 101 (without which it is impossible to achieve predictable outcomes under Section 101), Congress should change Section 101 to expressly overrule the Alice/Mayo jurisprudence and instead divide the responsibilities for patentability/eligibility and enforcement as follows:

The USPTO/Patent Trial and Appeal Board (PTAB) should deal with all the technical aspects of patents, including patent eligibility, using clearly defined guidelines based on well-settled law.
The courts should deal primarily with patent enforcement, namely, issues of infringement and damages.
Congress should legislate that issues of eligibility (§101), novelty (§102), obviousness (§103), enablement and indefiniteness (§112) be handled by the PTAB in a single hearing, using clearly defined guidelines, within a predetermined length of time, maximum two years. Currently, these issues are often heard separately, taking years to get through multiple forums, causing financial hardship to patent owners. The USPTO hearings should allow patent owners to present relevant technical and scientific evidence, including expert testimony, as to what a person of ordinary skill in the art would understand regarding each issue. Administrative Patent Judges at the USPTO have the relevant scientific or technical training and experience in patent practice. Such decision-makers are better placed to understand the complexities of patents and would better appreciate the viewpoint of a skilled person in the relevant scientific and technical field.

America is the land of freedom and justice, yet I feel helpless as I look to the courts for a change in direction based on facts, not one person’s subjective opinions, and based on a workable, predictable and understandable legal scheme. The Supreme Court has passed up opportunities to clarify the law and to frankly acknowledge that its Section 101 jurisprudence is confusing. Unless SCOTUS acts, our only hope is for congressional intervention. Under today’s patent law, there are no patent owner rights for small inventors, only invalidation and infringement rights for wealthy corporations.

As Voip-Pal’s CEO and an inventor myself with two U.S. patents, our company’s story is instructive. Voip-Pal started its patent process in 2006. After spending millions of dollars in R&D, Voip-Pal created and patented a working IP-based telecommunications system with supernodes on multiple continents. After asserting our patents against Apple, Amazon, AT&T, Verizon and Twitter, we faced 12 inter partes review (IPR) challenges to our patents by two defendants (Apple and AT&T) and a third party, Unified Patents, acting on behalf of Silicon Valley companies. We successfully defeated all 12 IPRs—only to have our patents knocked down by two Alice Section 101 motions to dismiss, brought before a district court, which deemed Voip-Pal’s patented technologies to be an ineligible “abstract idea”, prior to claim construction and prior to our presenting expert evidence to the court. Those decisions are being vigorously appealed.

Unfortunately, anti-patent decisions made by some courts consider many new technologies to be abstract and unpatentable. Those decisions are taking us backwards and have made owning a patent no longer an asset for a small inventor or entity, but rather, a liability.

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THE AUTHOREmil Malak
Emil Malak is the largest single shareholder of Voip-Pal.com, Inc., a publicly traded company where he serves as a Director and Chief Executive Officer. He has spent the last 16 years overseeing the development of the company’s intellectual property comprised of more than twenty telecommunications patents in the United States and several international patents in Europe, India, Canada and Indonesia. In addition to his work as Voip-Pal’s CEO, Mr. Malak has spent the last 7 years involved with a medical research team of doctors, serving as the chairman of the board of Thorne BioMed Ltd. They are currently conducting cancer research in Germany where they are committed to pursuing a possible reduction to cancer metastasis.

For more information or to contact Emil, please visit his company profile page.

"It's not a matter of what is true that counts but a matter of what is perceived to be true."
Henry Kissinger